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Phuket business: Skyscrapers and economic woe

Legacy Phuket Gazette

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Phuket business: Skyscrapers and economic woe | The Thaiger

PHUKET: There’s an economic-cycle theory based on the link between the building of skyscrapers and economic strife. Guess what it’s called? Correct: the Skyscraper Index.

While many trends and theories these days are based on cycles, this economical theory is based on the completion of skyscrapers. So what is this theory and does it have any credibility?

Let’s first unravel the theory and then you can make up your own minds.

A tall index: Barclays recently published the new Skyscraper Index which shows there is an unhealthy correlation between the construction of the world’s next tallest building and an impending financial crisis. Sounds far-fetched, and is there any evidence to support this theory? All we can do is look at the historical time that Barclays is drawing this information from.

1873-1878 The long depression: The United States economic recession with bank failures that came to be known as the “Long Depression” coincided with the construction of the Equitable Life Building in 1873. At the time the building was the first skyscraper at a height of 142 feet.

1890, British banking crisis and world recession: The 309-foot New York World building, also known as the Pulitzer building and Chicago’s 269-foot Auditorium completed in 1889, coincided with the British banking crisis of 1890, and a world recession.

1893, US panic marked by the collapse of railroad over-building: The building of Chicago’s 302-foot Masonic Temple; the 348-foot Manhattan Life Building; and the 353-foot Milwaukee City Hall, coincided with the collapse of railroad overbuilding. It also coincided with a string of bank failures and a run on gold.

Still don’t see the link? Let’s look at some more recent examples.

1973-1975, US and world economic crisis: The 1972 construction of One World Trade Center; the 1973 completion of Two World Trade Center; and the 1974 construction of the Sears Tower in Chicago, coincided with a period of speculation in monetary expansion from foreign lending. It also coincided with the collapse of the Bretton Woods system, a rise in oil prices which caused a global economic crisis, and speculation in stocks, property, ships and aircraft.

1997-1998, Asian economic crisis: The Asian economic crisis, currency devaluation and speculation in stock and property, coincided with the completion of the Petronas Towers in 1997. The 1,483-foot Petronas Towers were the tallest buildings in the world, but also heralded the start of the Asian financial crash.

2000-2003, Dot com bubble: The construction of the 1,671-foot Taipei 101 skyscraper began in 1999 and was completed in 2004. The duration coincided with the recession in the early 2000s and the tech bubble.

2007-2010, The great recession: The 2010 completion of the tallest building in the world, the 2,717-foot Burj Khalifa, Dubai, coincided with the current global financial crisis.

So is this information reliable? When investing you have to take into account many factors, but I firmly believe trusting just “one” indicator, like the Skyscraper Index, is foolish. But there does seem to be an undeniable trend between the completion of skyscrapers and economic misfortune around the globe.

Investors look at everything from macro indicators like inflation, unemployment and GDP growth, to more bizarre ones like the diaper-rash indicator and the hemline index to measure the health of the economy.

Should we hold our breaths as the next world’s tallest skyscraper is built? Well, looking to China where 53 per cent of the world skyscrapers currently under construction are, and India where 14 new skyscrapers are currently underway; the economic prosperity in those regions don’t look set to falter any time soon.

David Mayes MBA lives in Phuket and provides wealth management services to expatriates around the globe, specializing in UK pension transfers. He can be reached at 085-335-8573 or david.m@faramond.com.

— Anthony Lyman

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Business

Thai Airways under pressure to deliver workable business plan

May Taylor

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Thai Airways under pressure to deliver workable business plan | The Thaiger

Thai Airways is coming under more pressure, after being given 30 days to deliver its new rehabilitation and business plans.

Thaworn Senniam, the Deputy Transport Minister, gave the instruction yesterday while meeting with the executive of the national carrier for an update on its financial status.

He says the business plan must provide clear information on how the fortunes of the airline can be turned around, with a focus on making it profitable once more, while improving customer satisfaction.

The order comes after Thai Airways President, Sumeth Damrongchaitham, denied last week that the airline was experiencing a liquidity crunch, claiming it had sufficient cash flow “for present and future operations”.

Minister Thaworn has previously said he does not believe Thai Airways’ existing rehabilitation plan will help it succeed in a turnaround. He has also ordered a monthly progress report on the carrier’s plans to buy new aircraft.

In September, the directors of Thai Airways asked the Executive Board to review a plan to order 38 additional aircraft, worth a total of 156 billion baht.

According to their second-quarter 2019 filing to the Stock Exchange of Thailand, Thai Airways and its subsidiaries reported a net loss of 6.878 billion baht, compared to a loss of 3.086 billion baht over the same period last year.

SOURCE: The Nation

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World Economic Forum says lack of critical thinking in Thailand affecting competitiveness

May Taylor

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World Economic Forum says lack of critical thinking in Thailand affecting competitiveness | The Thaiger

PHOTO: AFP

Thailand’s competitiveness ranking has dropped two places in the Global Competitiveness Index just released by the World Economic Forum (WEC) in Switzerland. The country has dropped from 38 to 40 out of a total of 141 global economies ranked.

The WEC claims that a lack of critical thinking in teaching in Thailand, along with its failure to dominate in any markets, plus its unsafe drinking water, is affecting the country’s competitiveness.

The Nation reports that Singapore has come top in the ranking, overtaking the U.S. and Vietnam has shot up 10 places to 67.

The deputy secretary general to the PM for political affairs, Kobsak Pootrakool, responded to the findings, saying that as other countries improved their rankings, Thailand needed to work harder to ensure their progress didn’t cause it to slip backwards.

“It’s like a running competition – if our pace is slower, others will overtake us, so we have to run faster.”

The dean of the Chulalongkorn Business School, Assistant Professor Wilert Puriwat believes he knows what the country must do to improve competitiveness.

“The survey found that skills among new university graduates have declined, especially in the area of critical thinking. We’ve failed the exam and it can’t be fixed by simply retaking the test – we need to restart learning.”

Assistant Professor Wilert says Thailand needs to change the way students are taught, adding that the country’s score on critical thinking in the classroom was the world’s lowest at 37 out of 100 points. Finland comes first, with 89 points.

Wilert points out that Thai students routinely perform poorly on tests compared to foreign counterparts, which can be blamed on an old-school reliance on rote learning through memorisation.

The WEF is urging Thailand to adapt a model that encourages creative and critical individual thinking in the classroom instead. It also recommends improvements be made in staff training in Thailand, and more fostering of digital skills.

SOURCE: The Nation

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Business

Samsung Electronics flags 56% fall in third quarter profits

The Thaiger

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Samsung Electronics flags 56% fall in third quarter profits | The Thaiger

“Samsung took advantage of the US trade ban against Chinese rival Huawei.”

PHOTO: CNBC

Samsung Electronics says it expects operating profits to drop more than 50% in Q3 amid a continued slump in the global chip market. Operating profits for July to September was expected to reach 7.7 trillion won (US$6.4 billion), down 56.2% from a year earlier – this from the world’s largest maker of smartphones and memory chips.

It marks the fourth consecutive quarter in which the South Korean tech company has recorded a drop in profits in the face of falling semiconductor prices and weakening demand for its mobile devices. Sales for the third quarter were expected to drop 5.3% from the same period last year.

The South Korean tech titan leads the global smartphone market with a 23% share of the sector, trailed by Chinese competitors Huawei and Oppo, with Apple in fourth place, according to sales tracker IHS Markit.

Samsung withholds net profit and sector-by-sector business performance until it releases its final earnings report, which is expected later this month.

The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world’s 11th-largest economy, and it is crucial to South Korea’s economic health. Analysts voiced optimism for the coming months, noting that falling inventory levels for semiconductors – which account for more than half of Samsung’s profit – will help stabilise chip prices after double-digit drops this year.

Sujeong Lim, an analyst at Counterpoint Research, said, that in the mobile business, Samsung took advantage of the US trade ban against Chinese rival Huawei, “replacing a strong competitor in crisis” with its mid-to-low tier Galaxy A handsets.

“The new A series has turned out to be an effective weapon to take share from its Android competitors.”

Samsung appealed to high-end users with the launch of its first foldable smartphone last month after faulty screens forced an embarrassing delay in April. The firm also rolled out its flagship Note 10 devices which analysts say have sold far better than its previous models, giving Samsung a much-needed boost in its mobile sales.

The premium smartphone market has grown fiercely competitive and overall sales have cooled as a lack of major innovation has caused people to wait longer before upgrading to new models. Samsung has also been caught up in a trade war between Japan and South Korea stemming from World War II disputes.

The row saw Tokyo impose tough restrictions on exports crucial to South Korean tech giants in July, and Samsung vice chairman Lee Jae-yong – who called the situation a “crisis” – has visited Tokyo to secure materials. Adding to Samsung’s woes, Lee is currently facing retrial over his role in a massive corruption scandal that brought down former president Park Geun-hye.

He was initially jailed for five years in 2017 on multiple convictions including bribery, which was reduced to a suspended sentence on appeal, only for the Supreme Court in August to order a retrial.

SOURCE: Agence France-Presse

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